Pittsfield MA Bankruptcy Attorney Blog

To Stop Foreclosure:Principal Write-Down or Principle Write-Down?

2012-05-21T14:00:00Z

In late March, discussing Foreclosure, there was an analysis and recommendations in the American Banker which comprised the most succinct commentary on the current mortgage/foreclosure Bank-Owned real-estate problem and how to begin to solve it. I went through the Maryland S&L crisis running failed institutions. The last thing I wanted in any of them was more real estate. It's just a messy way to waste resources.

Perhaps the most important portion of the author's comments is "if mortgage lenders and servicers undertake the challenge of developing teams of highly trained loss-mitigating experts, each able to professionally and sensitively work through an increasingly complex range of loan modification, restructuring, or short sale options with troubled borrowers, then real progress [to stop FORECLOSURE] can be made." To this point, not one mortgage company with whom I have dealt, Bank of America, JPMorgan Chase, Wells Fargo, Ally Bank, HSBC/HFC/Beneficial, and the OCWENs, GreenTrees etc has such a unit in place. The Call Centers read from a script and require the patience of a saint to negotiate. There is no Unit of specialists! Mention workout and you get transferred for 30 minutes+

One of the major program additions, to stem foreclosure, as proposed by the most recent housing stimulus is the concept of allowing principal reductions. The issue is not new, nor are the arguments against it. 1 ½ years ago I began researching and discussing the Home Equity Fractional Interest ("HEFI") program as a way to get houses back above water without sacrificing the possibility of recovering what the market won't support today. Kevin Hardin, and his company Equi Debt Solutions (http://www.equidebtsolutions.com) had produced a slide show (http://www.slideshare.net/equidebt/h-option) describing how the program works. Basically, the Mortgage Company agrees to a reduction of the principal balance, but in exchange gets a second mortgage. This allows the mortgage company and the homeowner to share in any appreciation of the property. Once the write down is recovered, due to a sale or maybe (in the distant future) a refinance, the homeowner and the Mortgage Company split the excess 50/50 or by whatever other agreement they reach at the time the transaction originally takes place. Although the program was accepted at the federal level, it withered on the vine and not one of the above-cited entities has ever discussed it with me or anyone else I know.

Banks can maintain their moral high-ground and insist borrowers pay; either with cash or their house. Their bottom line - don't worry - "we already have a reserve for the loss". Let us agree that we had the perfect storm scenario and no one is to blame. Let's fix the problem not nip at its heels like a Yorkie puppy.

Author's Copyright by Richard I Isacoff, Esq. , May, 2012

rii@isacofflaw.com

Mortgage Settlement - Banks Get "Free Pass"

2012-03-20T14:30:00Z

As the details of the Mortgage Settlement Agreement, the deal between 49 of 50 states and the U.S. on one side, and BanK of America, Wells Fargo, CitiBank, Ally Financial, and JP Morgan/Chase on the other, become analyzed, it a HUGE win for the Banks. The not only received a "Get Out Of Jail Free" card but are now assured that there will no jail and the cost will not hurt profits.

Quoting from the March 13, 2012 American Banker's article about the agreement

"The settlement includes releases from certain federal claims, including errors related to servicing conduct; origination; and errors specifically related to servicing loans for borrowers in bankruptcy

]]> The claim "fully and finally" releases the company and any affiliated entities, from any civil or administrative claims and any civil or administrative penalties -- including punitive or exemplary damages--for:

Servicing claims under the: Financial Institutions Reform, Recovery, and Enforcement Act; False Claims Act; the Racketeer Influenced and Corrupt Organizations Act; the Real Estate Settlement Procedures Act; Fair Credit Reporting Act; Fair Debt Collection Practices Act; Truth in Lending Act; Interstate Land Sales Full Disclosure Act and certain sections of the Gramm-Leach-Bliley Act.

Origination claims under RESPA, TILA, Fair Credit Reporting Act; and Interstate Land Sales Full Disclosure Act, and certain claims made under FIRREA.

The Consumer Financial Protection Bureau agreed to release servicers from any claims related to servicing or origination conduct that took place prior to July 21, 2011, when the bureau became an independent agency. But the agency reserved the right to obtain information related to conduct" (emphasis by this writer)

Perhaps the biggest issue for DEBTORS in the long term will be that Servicers and Lenders etc are released from any liability from servicing errors during a Bankruptcy. This is a huge WIN for the mortgage industry. Most servicers cannot keep track of payments for money owed before a bankruptcy and payments made AFTER the bankruptcy was filed. Pre and Post-petition debt transaction history is generally a nightmare. Even Gordion would not have a sword capable of solving his problem.

As with all such programs we willl have to wait for the regulations. The settlement is one thing - the details of administration is another.

Author's Copyright by Richard I. Isacoff, Esq., March 2012

rii@isacofflaw.com
www.isacofflaw.com

Force-Placed Insurance $$ - Consumer Finance Protection Board Missing Mark?

2012-03-09T15:00:00Z

The Consumer Finance Protection Board ("CFPB") is trying to rein-in a common practice of mortgage companies country-wide. Very often, if a mortgage company or mortgage servicer believes that a homeowners policy has lapsed or been cancelled, the Servicer/Lender will put it's own insurance on the property. This HIGH PRICED coverage is called force-placed insurance, now euphemistically known as "Collateral Protection Insurance" or "CPI".

]]> Presently, Lenders have the right to protect their collateral, and if the borrower doesn't insure against loss, the lender can. That makes sense. However, CPI is wildly more expensive than standard Homeowners and has been the cause of at least 25% of my foreclosure cases. The SCENARIO: A Homeowner misses paying for insurance, the lender is notified and puts CPI on, adds the cost to the escrow account payment, then the homeowner makes regular payment, but lender deems it "short", and puts money in suspense until there is enough to "make" a full payment. Within 6 months borrower is in default of mortgage payments by 3 months and foreclosure starts.

Yes, it is the borrower's responsibility to pay for the insurance as part of the agreement. But, when most get a notice stating that the lender is now paying, most borrowers believe it's their homeowners policy, at the rate they were paying, and that amount will be added to escrow charges. Not so! Because CPI is placed without any underwriting and home values (replacement) are guessed, the premiums are 2 to 5 to 20 times higher than Homeowners. CPI shows on a mortgage bill as "HAZARD" insurance, which is even more confusing.

An extreme, but real case I had (nothing is hyped): Borrowers fell behind due to a job layoff and a disability . Mortgagee refused to modify loan or grant forbearance. Borrowers filed Bankruptcy in an attempt to keep the house but the arrears were too high. Suit over predatory lending issues died due to time passing, thus the Statute of Limitations passing as well. BUT, while the Bankruptcy was still open, and before an eviction action took place, the lender send my clients a premium notice for $18,800 for CPI. The loan was just about $100K but the insurance was for $630K. That was claimed to be the amount that it would have cost to replace the house - sure. I could have purchased the entire street for $630,000!

That took all of the fight left out of my clients. They could not pay the regular payment, the arrears (even over 60 months) AND $1,566 per month for CPI (that was twice the mortgage payment). They packed up and moved. When I tried to get recompense from the lender for violating the automatic stay in Bankruptcy and for unfair and deceptive practices, the law firm for the lender sent me a nice letter saying, in essence, too bad.

At auction the house sold but the sale died. The resultant sale to a real 3rd party purchaser was for less than $20,000. The lender lost but got what it deserved, but my clients and wife's parents had to move. The lender lost twice as my clients would still be there paying a regular payment at 4% with regular homeowners, just fine.

The CFPB discussed rule would not have helped here. The lender had the right to insure but why not JUST PAY THE HOMEOWNER'S PREMIUM, and where did they get $630K. What else would you expect from a bank that told me "We don't have to do modifications. We didn't take any federal (TARP) money!"

Author's Copyright by Richard I Isacoff, Esq, March, 2012

rii@isacofflaw.com
www.isacofflaw.com/blog

Mortgage Foreclosure Settlement : Not For Everyone

2012-02-13T16:00:00Z

Hooray! We have a Mortgage Foreclosure Settlement - $26B worth but who gets help and where does the rest of the money go? NO ONE KNOWS yet, and no one know who is covered and will get assistance of any kind!
What we do know is that the 5 major servicers, Bank of America, JPMorgan Chase, Ally Financial (the old GMAC), CitiBank/CitiMortgage etc, and Wells Fargo are funding the settlement (there may be others later).

]]> We DO KNOW that if you live in Oklahoma you opted out of the settlement, and if your loan is owned by FannieMae (FNMA) or FreddieMac (FHMC) YOU ARE NOT INCLUDED. Below is a link to the website for the Settlement where you can check to see if your loan is owned by either of these GSEs (Gov't Sponsored Enterprises).

We also know that 1. if your case falls into the included category and you lost your house in what would be deemed an improper foreclosure you may be entitled to $2,000+/-. 2. If your mortgage payments are current but your house is worth less than you owe, you may be eligible for a refinance to a low rate. 3. If you need a modification, you might get a Principal Reduction so you owe less and therefore your payment may be lowered. (No items 2 and 3 ARE NOT reversed - seems like they should be however).

Nothing will be ready for 6-9 months, and most of the programs will be administered through the States' Attorneys General's Offices - the program will be implemented over the next 3 years.

Some perspective on the Settlement amount: 2011 - Bk of Amer earned $17B after loan loss reserves ("net" income $1.4B); JPMorgan "Net" Income $19B; Citi "Net" Income $11B; Wells Fargo $16B. Just these 4 banks had a "Net" Income of $47B for 2011 and that is without stripping reserves for the Settlement that have already been put aside and reduced income.

Last - the official word is "Wait, you will be contacted" or, if you are in the foreclosed category being handled by your State's Attorney General, contact that office through the link provided on the National Mortgage Settlement site.

http://www.nationalmortgagesettlement.com/help

Author's Copyright by Richard I. Isacoff, Esq., February 2012

rii@isacofflaw.com
www.isacofflaw.com

Mortgage Foreclosure Settlement:Sky Clearing or Storm Coming?

2012-02-10T15:00:00Z

Whether CA and NY join the Mortgage Foreclosure Settlement is anticlimactic. The quibbling over the amount of the settlement was foolish. $17B or $25B has never been the issue. Of bigger concern is the ultimate trickle-down (how Reaganesque) to the affected homeowners.

The Banks have wanted a "free" pass as to future suits and an indemnification from suits by borrowers who are now out of house and home. I know that there will be the hue and cry of "they only got what they deserved; after all they didn't make their payments - so the paperwork was faulty - they didn't pay!" (I worked at a bank where a fellow SVP called it the "Human Cry" - never knew if it was a clever pun or...). Here, there is a human cry and it's from the families who fell behind for legitimate reasons (loss of job due to federal program cutbacks), tried to get a modification but before they could react their house was gone.

]]> I have worked with nearly 100 variations of that scenario in the past 3 years! And I have handled 50+/- of the situation where the house got to be too expensive and the homeowner stopped paying because the mtge co refused payments after 90 or 120 days delinquent.

For that first group, where there were no assignments, where MERS (Mortgage Electronic Registration System) initially foreclosed, where HAMP was ignored or where a major Lender/Servicer stated to me "We don't have to do modifications because we did not take any Federal ("TARP") money", is the group that should be compensated. With the per household figure being $1,500, that's not even 1st, last and security for an apartment, and in many places barely 1st month's rent.

The Securitization of mortgages into RMBS (Residential Mortgage Backed Securities - where thousands of mortgages were pooled together - See Posting Dated ) made this fiasco possible. In a sense, the banks have had to deal with the losing cards they got in the draw. The suit should have included the rating agencies, the Investment Banks, and all who facilitated a swindle that makes Madoff look like a low level Ponzi scheme.

I cannot point a finger at any one individual, organization, regulator, administration etc and say "You caused this world recession!!" That being the case, the Banks that allowed forged or failed documents to be used, corrupted the Civil side of the legal system by swamping Plaintiffs' lawyers with Wall Street law firms to a point where, even though all procedures were followed the hired guns won.

I ran failed S&Ls in MD and part of the Bank of New England mess in MA - I have chased and caught the thieves and cut the business/person who just got a raw deal some slack. Here we have Corporate Persons, some of which took "assets" at the request or arm twisting of the Fed, Treasury, OCC, or FDIC, being asked to pay a quarter's earnings to make up for a systemic failure. That's the price for being in the game but here everyone has lost. Stockholders, displaced CEOs and other officers, Homeowners, Administration officials etc.

The $25B is just hush money - hush to the whole bloody mess.

PS AN AGREEMENT WAS REACHED JUST AFTER I RELEASED THIS FOR 10AM FRIDAY. HERE IS A LINK TO THE JUSTICE DEPARTMENT'S PRESS RELEASE http://tinyurl.com/73ypvub

"I Disclose...Nothing!"

2012-01-23T15:00:00Z

The title of this Posting, about Consumer Finance, is from an Opinion piece in the New York Times Sunday, Jan. 22,2012 by Elisabeth Rosenthal regarding the matter of Disclosures. Her position is that there isn't any, especially in the Consumer Finance area. The link to the article is shown at the end of this posting. It's worth reading, every word of it!

NOW MY POSTING:

FOR DISCLOSURE PURPOSES ONLY!!!!!!

]]> I am a lawyer. Please do not pillage me for thinking, many years ago, that lawyers HELPED people, and had a high degree of integrity. Even worse, at one foolish time I actually considered getting into politics, again thinking that our elected officials actually care about their constituents.

I come face to face every day, handling foreclosure prevention work and consumer finance, with federally mandated and corporate sought after disclosures like the "[NO] Truth In Lending" disclosure required at all real estate transactions. Unlike many of my brethren and sisteren I actually understand the documents. Having spent 18 years in Banking, at times working for regulatory bodies, and being an attorney, I learned the hidden meanings of the documents. Dan Brown would just be disappointed as would the Incas.

Instead of calling the volumes of paper presented to borrowers of any type disclosures, how about some honesty - call them DISCLAIMERS "NO MATTER WHAT WE DO TO YOU, WE HAVE NO RESPONSIBILITY FOR ANYTHING. IF YOU SHOULD ATTEMPT TO ENFORCE ANY LAWS WE WILL BRING THE FURIES OF HELL UPON YOU".

Unfortunately the last statement is only a mild exaggeration. The law firms representing the lenders and other large corporations can inundate a consumer or her/his lawyer with paper and deadlines.- EXPERIENCE.

No matter what a disclosure states, if there is no regulatory oversight in a meaningful way to protect consumers, the disclosures are worthless. The Tea Party et al who want less government better have an army of lawyers ready.

Most recently a Bankruptcy case involving a foreclosure was decided when the judge rules that all of the required disclosures were given to the borrower - the fact that the lender didn't follow federal guidelines was excused - guideline don't count. DISCLOSURES=OBFUSCATION.

Just remember "Less is More" in many cases

Richard I Isacoff, Esq.

Author's Copyright by Richard I. Isacoff, Esq, January 2012
rii@isacofflaw.com
www.isacofflaw.com

http://www.nytimes.com/2012/01/22/sunday-review/hard-truths-about-disclosure.html?pagewanted=1&_r=1&ref=opinion by Elisabeth Rosenthal

Bankruptcy: After Christmas?

2011-11-29T15:00:00Z

It's the time of the year where many people start buying gifts for others for the holidays. That, of course, is in addition to buying food, heat, electricity, telephone(s), gasoline, auto insurance, cigarettes (bad for health - bad for pocketbook), cable, clothes (don't forget shoes, socks, and underwear), and paying rent or mortgage and the car payment. Oh, and remember to buy the medications the Doctor prescribed.

Quite a list! How To Pay For It? Many people use CREDIT CARDS. Then comes February 1st and the bills flood the mailbox overwhelming the Letter Carrier's ability to carry all of the Visa, Mastercard, Discover, JC Penny, Sears, BestBuy, Fingerhut, QVC, Amex, Capital One, Orchard Bank, Bank of America et al BILLS.

]]> When asked how they expect to pay, many will say "Well, I HAD to get those presents. I mean, it was Christmas (or Chanukah or whatever other holiday "requires" gift giving)". Says the lawyer at the first consultation about debt relief, "Okay, but how did you expect to pay the bills?" - the classic answer "I didn't think about that. I figured I be able to pay a little on each card, I guess." This response is typical from clients with sufficient income to pay the bill with minimum payments over the next 20 years, and from those who HAVE TO GO WITHOUT FOOD AND HEAT TO MAKE ONE PAYMENT!!

There are several problems here, actually many more than several. The biggest, in a sense, is that with debt that has accumulated over the past 3, 5, or 10 years there is no way ANY PAYMENTS are affordable. Then comes "Can I file bankruptcy?" The real question is "Can I file bankruptcy and still get rid of my bills (a discharge) even though I was foolish...?" There is no easy answer.

In order to eliminate/discharge debt, the Bankruptcy has to be filed in good faith. You cannot intentionally incur debt that you know you cannot pay. At a minimum, that debt cannot be discharged (made to go away). But wait...There's more! When the gifts were being bought and the plastic nearly melting from over-use, did the purchaser intend to repay the credit card company? The easy answer is "Yes, I always pay my bills!" But, is that the honest answer.

Many people just do not think about or know how to think about budgeting. People of all ages get caught up in the "I have to buy a gift for..." mode. So, what can be done for the honest but horrid money manager/giver?

Rule 1. Know how much you take home every month and how much must be spent on essentials, like the list above

Rule 2. If there is any extra, before deducting current credit card payments, be certain that it is truly disposable income immediately. Do not count the money you will save when you stop smoking.

Rule 3. Add up all of your credit card and other unsecured debt (debt not attached to collateral, like a car loan)

Rule 4. Multiply the amount of debt by 3% or 0.03

Rule 5. If the result after following Rule 4 is more than your "extra" (your disposable income) you should not incur more debt.

Rule 6. To figure how much unsecured debt you can support reasonably, DIVIDE your extra/disposable income by .03. So, if you have $200/month truly extra, the Most unsecured debt you can have is $6,000. And, remember that "extra" is what's left after paying all of the expenses listed in the beginning of this posting and any other NECESSARY expenses you have.

Even at the level shown, paying will be a bit of a struggle - things happen that cost money and are unexpected. Missing one month of the payment on any unsecured debt will make everything fall apart and you might never catch up.

If you have done those calculations, and after being careful you find that 6 months (I just picked a number) into the new year that you cannot pay because "Life comes at you fast!", then yes, you can file a bankruptcy with a clear conscience and peace of mind.

Author's Copyright by Richard I. Isacoff, Esq, November, 2011

rii@isacofflaw.com
http://www.isacofflaw.com

Pay Bills or Eat

2011-11-14T15:00:00Z

Bankruptcy? Me? NO! (or maybe).The need to PayBills is a perception among those of us who are of retirement age, or past it; we have to pay every bill we have even if it means going without prescribed medications or proper food. To say that this is a wrong or bad idea is not appropriate. Those of us who try our best to honor our commitments should be commended, not condemned.

HOWEVER, the LAW , that's the Federal law, specifically Title 11 of the United States Code, provides for DEBT RELIEF. So, why don't more people take advantage of this legal RIGHT? There are many reasons but most are rooted in a belief system that not paying obligations is immoral, unethical, something only shysters or "those kind of people" would do. Many of these same people, those of us who feel there is no way but to pay, have had no qualms, no hesitations, about utilizing many different sections of Title 26 of the US Code which provides TAX RELIEF.

]]> We all take deductions when we file taxes, rather than paying the maximum tax that we could pay based on income. We use the standard deduction or we itemize - and we itemize everything possible: real estate taxes, mortgage interest, medical expenses including part of the cost of medical insurance, tax return preparation fees, costs of caring for a dependent - and on & on. Somewhere there is a disconnect in the two position/attitudes.

The Debt Relief is Bankruptcy Protection - Protection from Creditors. IT IS A RIGHT, NOT A PRIVILEGE. Unless you have committed fraud, or some other unsavory act you are cannot be denied the Right to Obtain a Fresh Start. That is what the law discusses: a "FRESH START". And that refers to a FRESH START from DEBT.

There is no shame in admitting that the $10,000 of credit card debt that has been being paid for years, never denting the balance owed, is too much to repay. Keep in mind, that while it's counter-intuitive, the credit card companies will not make deals to accept less than 100% of what's owed. The fact that gas is now $4.00/gallon, and that fresh fruit and vegetables are more expensive than the best steaks, and that medical costs go up almost daily it seems....

The shame of the current economic environment is that some of the lifelines that many people have relied upon have been eliminated or cut-back. Programs like food stamps, fuel assistance, community health care programs, and subsidized housing are all under-funded because of the recession here and the on-going financial crisis world-wide.

I can only suggest that if you are having your own personal economic meltdown you seek advice from a competent Bankruptcy attorney. Any attorney worth her/her "salt" (or pepper) will give you enough information that you will know what options are available to you. If you cannot find someone in your area, feel free to call my office or send me an e-mail and I can get you connected to the proper referral folks.

Author's Copyright by Richard I. Isacoff, Esq, November 2011
rii@isacofflaw.com
http://www.isacofflaw.com/

Want A Mortgage Modification? Follow The Rules!

2011-11-04T15:00:00Z

RULES TO FOLLOW!!

1. Call the Servicer and ask for modification or HAMP documents or go on their website and print them

2. Put all required documents together - fill them out completely and DATE THEM ALL and send them to the address stated on the website or the forms. Often they MUST be faxed.

3. Remember, if you are working with an attorney or any other third-party, that person/entity is going to have to have written permission from you to deal with the servicer/lender

]]> 4. Documents expire in 60 days. That means if you send in only some of the documents required, and then send in more, and then send in more because the servicer wants them, the first docs you submitted may be "stale dated" - just like bread - and need to be updated and resubmitted. This is where the process breaks down for most Homeowners.

5. Put aside the mortgage payment you were making or that you hope to be making. If you cannot save the money, you cannot save your home. Put simply, If a borrower is not disciplined enough to save the money to pay the mortgage, then there is no ability to pay the modified payment - so what is the point of going through all of the aggravation. Sometimes Life Is Not Fair.

6. If you get a package sent to you from the lender/servicer open it immediately. If documents are due on Wednesday of next week Make sure they get there by then. A day late and you are disqualified. Fair? Probably not but read the last sentence of Item 5 above.

The most frustrating part of this process for me is when I ask my client, "Okay, you are now 4 months behind because the payment went up. How much have you saved? Certainly if the payment was $700 per month and now it's $850, you have the $700 put aside for each of the four months the Bank returned your money!", and the client answers "Nothing - I paid other bills". At which point I ask "Well, how are you going to pay if you get a modification if you can't even save the money you had been paying?". Occasionally the client will say "I don't know". Most often I hear "Well, when I have the modification, I will be able to make the payments somehow". With trepidation I ask "How, if you can't make the payments now?".

This conversation takes place in my office or on my telephone at least twice every week and sometimes twice a day.

The people with whom you will speak are not bad people. They are doing a job, trying to avoid losing their house and are jsut asking the questions they must to avoid being fired. Don't rant at them - that assures NO COOPERATION. Remember that the folks at the top of the MBS pyramid are the folks "calling the shots" and they can't lose.

Author's Copyright by Richard I Isacoff, Esq., November 2011
rii@isacofflaw.com
http://www.isacofflaw.com

Mortgage Modifications - Where Did The Money Go?

2011-11-01T14:00:00Z

My mortgage modification clients often ask about the class actions or Attorney Generals actions against mortgage companies, lenders, and servicers, when the newspapers/Internet proclaims "XYZ Bank settles with Massachusetts for $XXX Million". The biggest single question is "Where did the money go?" Unfortunately, the answer I give is "I don't know except that there was no fund set up for modifications". Then I get the BLANK STARES from my clients.

]]> "How can that be?" they query, to which I reply, "I do not know - probably to offset the cost of the suit and to establish a new unit to investigate mortgage fraud AND to help balance the budget." To this date I have never received notification that the Commonwealth of MA is setting up a fund to help borrowers avoid foreclosures, or even to set up an agency to help homeowners apply for a loan modification.

At this juncture, homeowners are being cast adrift. The 50 States +/- CA & MA (depends on the day) have been arguing with the biggest lenders/servicers over a settlement for all of these institutions evil-doings; and they were indeed evil! The proposals are at $26Billion but no one is offering to pay. Instead the Banks et al want to promise they won't do it again and that they will make it easier for homeowners to get a modification. Making it more difficult would be to say "NO, WE WON'T DO MODS ANYMORE". No money will go to individual homeowners. No funds will be set up to help a borrower get caught up. As the title of the movie proclaimed "GONE IN 60 SECONDS" (so where is Nicholas Cage when we need him?).

Even if there is money made available, the selection/application process will be as difficult as getting the modification as evidenced by the recent Federal "EHLP" (Emergency Home Loan Program) program that only gave out 1/2 of the $1Billion allocated for it.

The refrain often heard when one is trying to get a modification is "The Investors do not allow modifications" or "This requested modification is outside investor guidelines". (Investors are the entities which make and buy the bonds - lots of incest) When the investor is the Federal Nation Mortgage Association (FannieMae) or the Federal Home Mortgage Corporation (FreddieMac) or the Federal Housing Administration (FHA) the formula used to determine "Yes" or "No" is at least obtainable. And, because these are either Government Agencies or quasi-government agencies, they do participate in the HAMP program. But, you deal not with Fannie or Freddie or the FHA but with the loan SERVICER. This is the company picked to run the pool of loans - to collect payments and send out bills, and to start foreclosures and to actually WORK ON MODIFICATIONS.

There is no rhyme or reason to the process. Each servicer has slightly different requirements, all allowed by the Making Home Affordable program which created HAMP. Paperwork must be submitted and often resubmitted again and again. This is the period that most borrowers give up or taking time from work to put documents together again and again, in the hope of getting an affordable payment now that there is no more overtime or even one less job for the borrower(s) to count-on for the money to meet the payments.

I often sit at my desk working on one or two cases, while on hold with a servicer for an hour or sometimes two. I can keep working on my computer and have at least one other phone in use while I work with a servicer. So far, my results are good but my client has no money to pay for all of that time, even when I only count the time I am actually doing calculations and filling out forms or talking to a servicer's representative. Because, in addition, there are the hours spent with the client who has no money to pay for the time and the results.

The head of the Fedeal Hosuiing Finance Agency said within the past day or so that FreddieMac will be concenttrating on selling foreclosed properties to investors who will rent them. READ MY LAST POST - I AM A STEP AHEAD OF HIM.

As we get ready (a year early) for the Presidential election one cannot help but wonder whether anyone in D.C. knows what is going on - or cares! And will it be any different in a year - nah - well yes it will be - more people will be out of their homes!

Author's Copyright by Richard I. Isacoff, Esq., Nov 2011

rii@isacofflaw.com
www.isacofflaw.com

Housing for the Homeless, Inc. (in organization)

2011-10-26T15:00:00Z

A while ago, I responded to a comment from a mortgage financing friend regarding the current housing situation vis a vis foreclosures. His view is that the "market should find its own level";that the Federal Government should not interfere with modification programs, the EHLP program etc. Now, once again (the last time was July) Rep. Randy Neugebauer (R-Texas) said the Obama administration should be focused on helping the private market move through the backlog of foreclosures, instead of more stimulus packages like the revised HARP program. My friend's view is catching - like pneumonia! After some thought, I must agree with him.

]]> If the pace of foreclosures returns to normal and evictions follow promptly, there will be plenty of Housing For The Homeless. There will be no need to build new shelters. Mortgagees can just allow cities to house "The Homeless" in these abandoned emptied OREO properties.

The cities would pay but only by not taxing the mortgagee/foreclosing entity. If the mortgagee does not incur this liability by recording a deed, then more properties will be formally owned by the entity which won the foreclosure sale bid.

Now, one might ask,"Why should the homeless get to live in someone else's house when the someone else just got evicted and became HOMELESS?" Answer: "Well, that's the market finding its level!!!". Further, the new homeless family can move into another "victim's" house as he/they get thrown out! See, that way no one can complain - except "The Investors".

This is the shadowy group (Goldman, Lehman, Bear Stearns, Countrywide, Deutsche Bank, JPMorgan et al) which created the securitizations of the mortgages, and sold and/or bought (and hedged) the resulting "bonds". They are the folks who took a mortgage, put it together with 3000 others, released all of the originating banks/mortgage companies from all liability, and sold pieces of the pool of mortgages as "Mortgage-Backed Security" shares/participations.

A solution to the matter of getting the investors paid during the OREO stage, would be to have the "Newly Homeless" receive a minimum wage pay (because they are out of work which is why they lost the house to start with) to remove all of the black mold that develops in uninhabited housing. To be fair, some of it isn't Black Mold of the bad kind but just regular garden variety MOLD.

So we have the solution: 1. Increase the pace of foreclosures to create Housing for the Homeless 2. Hire the homeless, now in a home, to remove mold 3. This helps the national unemployment problem so there should be some federal money for job creation, which can be paid to the investors as rent from the Homeless 4. The homeless move in, shopping carts, kids and all, and the streets look better, so new companies will move into the formerly empty urban areas because the former homeless have homes and a paycheck 5. The suits against the foreclosing mortgagees should slow, because, the family which just got evicted can move into another family's newly vacant home AND get paid.

The market will find its level. Hopefully it will be above the water table.

Author's Copyright by Richard I. Isacoff, Esq.

rii@isacofflaw.com http://www.isacofflaw.com

No Money to File Bankruptcy

2011-10-03T14:00:00Z

Bankruptcy is rising but filings are falling! Why? Simple answer: People do not have money to file for protection under the Bankruptcy Code. That may sound/read like an "Of course they cannot afford bankruptcy, they don't have any money!" Unfortunately, this is a new phenomenon.

Until recently, people would call regularly to ask for free debt counseling and consultation to discuss financial problems which could result in a Bankruptcy case. Generally, we are able to work out payment arrangements with almost anyone. ALMOST is the operative word. If the person has no money and no job, and no way to pay us, even on a $25 per week basis, there is little that we can do as an office.

Understand that every lawyer does a certain amount of INTENTIONAL pro-bono work, and I do not know of an attorney who would turn away a truly troubled indigent person who just lost the house, car, wife/husband etc. That stated, none of us in Private Practice can do everything for nothing - work for free all of the time!

Because of the downturn and especially the lack of employment people aren't even calling because they feel that they cannot afford the cost of getting "peace of mind". My view of the problem is slightly different. We have accepted payments every week for a year from clients, all the while giving them as much protection as we could from creditors. Most lawyers will do that for people really in need.

Some ground rules apply:

1. Don't come in with your partner and state that you cannot afford our fees because you can't cut back on smoking 2 packs a day each. At $9/pk, that's $36/day or more than $1,000 per month.

2. While I encourage people to come in, I do not expect them to ask me to help them with a bankruptcy THEY are going to file.

3. Some folks will have to file Bankruptcy but do not want to give up they "toys" - the snowmobile, PWC, 4-wheeler, or cut back on the $200 per month cable or satellite bill because of all of the special sports channels and events, or drop the $200/mo cell service and on and on...

Filing for Bankruptcy is to give someone(s) in debt a "FRESH START". It is written that way in the Code and is discussed in cases and in Court. No one expects someone looking for that second chance to sell their soul, but to cut back on smoking, or drop a few cable channels, or give up the "bike" would seem a fair trade. The reality is that in a bankruptcy, where no unsecured creditor is getting paid back anything, you are not allowed to keep the snowmobile and the bike and the...

If you have a house, we can help you find the funds to pay your mortgage by eliminating unsecured debt. You can keep almost all of your personal property and your home, except for things like the PWC for which you are paying $300/month for the next 36 months etc. But clothing, regular furniture, tools, in most cases automobiles (not 4 or 5), RETIREMENT plans including IRAs, and if you are renting or have no equity in your house a reasonable amount of cash/money in the bank. Depending on the situation, maybe even $10,000.

If you have the $10,000 but your debt is $70,000 you cannot pay everyone back if you have $35,000 in income and a child. But, you can either pay a small portion back or protect what the law allows and perhaps pay nothing back, and you can pay the legal fees to file the Bankruptcy. It could be a Chapter 7 (no payback) or a Chapter 13 (payback of what you have left as disposable income each month). Or, if you wish, you can give the Trustee the $10,000, less attorneys fees, and have the Trustee distribute what is left to creditors on a pro-rata basis. It is not required, but if you feel that you should pay back what you can afford, the Trustee will certainly oblige. Just be aware that it isn't necessary in most cases.

ADVICE: If you are in debt to a point where you know you cannot make any meaningful payments, call a Bankruptcy attorney. Payment plans can be worked-out, and the initial consultation to find out about YOUR RIGHTS is always "NO COST" here.

Author's Copyright by Richard I. Isacoff, Esq., October, 2011
rii@isacofflaw.com; http://www.isacofflaw.com

]]>

Bankruptcy: Not a Four-Letter Word!

2011-09-19T14:00:00Z

Bankruptcy has had a bad reputation over the decades for some good and some bad reasons. The good reasons for a bad reputation all boil down to the issue of fraud: people who have assets and are hiding them from creditors, or people who went into business and ran up debt they could not afford, or consumers who bought "stuff" with credit (cards) with no ability to repay. In the later case, it's rather hard to repossess a vacation cruise, and in the former, if the money from profits is spent, it's gone for good. Unless intent to commit fraud can be shown, normally a Bankruptcy will wipe out debt.

Let's take a step back and discuss what a Bankruptcy does. Quite simply when a bankruptcy is filed, it protects the debtors from creditors. The are two main types of PERSONAL BANKRUPTCY - Chapter 7, where you eliminate debt without any repayment but surrender personal property and real estate that is not protected by law for the benefit of the creditors. A Chapter 13, requires that you have money left over every month AFTER paying REGULAR LIVING EXPENSES, and from the money remaining each month pay creditors on a pro rata basis.

The primary reasons for filing for protection from creditors are not voluntary: 1. Medical bills and illnesses 2. Loss of a job or substantial reduction in hours 3. A birth or death in the family 4. A two income household becoming a one income family 5. Bad money management. A DISTANT 6. is fraud - between 5% and 10%.

For whatever reason, people have a negative opinion of bankruptcy - yet people would be surprised to find out about friends and neighbors have filed for protection.

A different reason to have a more positive opinion of bankruptcy filings is that THE OLD AND NEW TESTAMENTS, AND THE QUR'AN all encourage a forgiveness of debt to those truly burdened. CREDITOR should FORGIVE the DEBTOR.

It makes no sense for a retired person on a fixed income to have to make a decision between food or medicine; or for a family to have to deny a child the presence of a parent so that parent can work 3 jobs to just pay basic bills. Please do not misunderstand: it is not suggested that filing a for protection from creditors is the first course of action to think about, but it should not be the last and considered after losing everything.

Simple tips:

1. Don't solicit credit cards or get as many as you can. Determine how much credit you need and can afford to repay with current income. Only borrower that much.

2. If you find yourself using credit for living expenses, seek a credit counseling service such as Consumer Credit Counseling Service or Money Management International - just be certain that it is a true not for profit agency, not a scam. If you have to pay a big up front fee - stay away. If you have a bank where you are known and are comfortable at a branch, ask if the bank has someone to help you budget your money.

3. As soon as you find yourself ready to get a second card or a loan to make payments on other cards or loans, consult an attorney who handles bankruptcy as she/he will also deal with basic debt counseling.

4. Don' let pride get in the way of keeping your peace of mind or all you have left is a piece of mind.

For more in-depth information visit my website http://www.isacofflaw.comor other resources like the National Association of Consumer Bankruptcy Attorneys, or the American Bankruptcy Institute.

Author's Copyright by Richard I. Isacoff, Esq, September,2011

rii@isacofflaw.com

http://www.isacofflaw.com

Does Your Economy = Bankruptcy?

2011-09-05T15:00:00Z

Bankruptcy? Now that the national economy is no longer an issue, we have to turn to a new topic- "The Economy", but a different sense of the economy - YOUR economic condition. This may mirror the government's or, perhaps, you may actually understand the state of your finances, as you read this.

Are/If you are in a position where "deficit spending" is necessary for you to pay your bills (not unlike the issue of the Federal debt-ceiling - we had to get Congress to let us borrow more so we could pay the interest on the bill we already have incurred) which is like getting a new credit card with an extra few thousand dollars of credit available so you can pay the interest due on the other cards, and buy food, or pay the mortgage, or put gas in the car or... well you get the idea, you need to reconsider your position immediately.
Unlike the United States of America, you cannot keep getting more debt without near term (tomorrow or the day after) consequences. Consequences like bill collectors calling; Court appearances being required; car payments missed; a mortgage payment missed or paid more than a month late; a foreclosure; or just ANXIETY and WORRY about what you are going to do when the credit limit is exhausted.

Here is a short check-list to review:

1. Is the reason for the excessive debt, spending, reduced income, or both?

2. If it's reduced income, is the situation temporary with an end in sight or long-term?

3. If the debt is due to spending but not because of a loss of income, what caused the spending? Necessities, like food and shelter, or costs that could have been deferred, like extra clothes, a "new" car, a vacation? If the run-up of credit card or other debt is because of buying or spending for necessities, you cannot fix the problem alone. If the debt is for any other reason than necessary living expenses, then STOP SPENDING NOW.

4. In either case, figure how much you owe to each creditor. Then determine how much is due each month; for credit cards use the minimum payment PLUS 10% of that payment; for long term debt like a mortgage or car loan, use the actual payments due each month. When dealing with medical bills, remember that most often a call to the doctor or hospital with a discussion about a monthly payment plan will bring results that you may be able to afford - and may be with no interest.

5. Compare the monthly payments to creditors, ALL OF THEM, to your take home income. Remember that if you get paid weekly, you should multiply your take home pay times 52 weeks and then divide the result by 12. If your pay is every other week multiply your take home by 26 and then divide the result by 12. That way you have accounted for the 4 "extra" weeks each year.

6. Make the same comparison of monthly payments to creditors to your GROSS INCOME -No Deductions for taxes, insurance etc taken.

7. If you divide your payments to creditors by the amount of your income (net income first, then gross income) you will see quickly whether you can afford the payments (based on general averages). For example: Gross income = $4000 per month - monthly payments to creditors (called debt service) = $ 2,000 per month (that is a Debt to Income, called "DTI", Ratio of 50%), you are probably running out of groceries or gasoline or RUNNING UP CREDIT CARD BALANCES, because there is not enough money to go around. The ratio should be no more than 40%! Even that is a stretch against GROSS INCOME

8. Once you reach that point, unless you take immediate action, like earning more money, cutting back living expenses and LOWERING THE MONTH DEBT SERVICE, you will end up losing a car, losing a house, AND LOSING YOUR PEACE OF MIND.

9. If the Debt Service cannot be lowered, if you cannot cut back on payments to creditors without a foreclosure or a repossession, and if your income is maxed-out, YOU SHOULD CONSULT AN ATTORNEY ABOUT BANKRUPTCY.
REMEMBER "BANKRUPTCY" IS NOT A FOUR-LETTER WORD BUT "DEBT" IS!!

Look for the next post which will explain about the "okayness" of filing for Protection From Creditors by a Bankruptcy Filing. (Coming to a theater near you (actually just this blog) on 9/9/11)

Author's Copyright by Richard I. Isacoff, Esq, September, 2011
rii@isacofflaw.com
http://www.isacofflaw.com

"Danger Will Rogers...Danger" * Economy Approaching

2011-08-14T18:31:40Z

Writing about our Economy, Steven Pearlstein, a columnist for the Washington Post wrote "Global Economy Comes To The End Of Its String" and went on to explain, quite "readably" why it's happening. The column, in the 8/6/11 online edition, discusses the fact that we are cycling back to 2008 levels (maybe), because we never fixed the underlying problems with ours and the global economies. The only issue I would have with the characterization is that we are finding it increasingly difficult to separate our Economy from the global Economy.

As was written in the prior post here, the U.S. has been spending more than it's been making. We have relied on foreign countries, like China, to continue to buy our Treasury Bonds; this is just lending us money. That's what the whole 3 month "Debt-Ceiling" debate was all about. Are we just going back to 2008? Brian Wolfman posted a short piece of Mr. Pearlstein's article on the Consumer Law & Policy Blog and asks at the end "So, what's the chance that will happen given what we've just seen in Congress?" Here is my response:

"You ask, somewhat rhetorically, about the chances for Congress to adopt policies like those Mr. Pearlstein outlined and accept his analysis of the "how we got here". If you know how to bring back from the un-living (on earth anyway) Sam Rayburn, Tip O'Neill, Dwight Eisenhower, Louis Brandeis, Earl Warren, Hugo Black, Ronald Reagan, and Gerald Ford, we might have a chance. As partisan as some of those folks were, they put the Country first when the chips were down.

The current Congress is so ideologically focused and unyielding in their world view, that they belong back to a time when the "world was flat". Common sense tells them that if you go to a beach and look out to the horizon, you can see that the world is flat. That was the prevailing common sense. Oh, and, of course, from Wasilla, AK you can see Russia (I tried with military issue binoculars, from the highest point in Wasilla, in March of 2010, on a clear day, and could NOT see the "Hammer and Sickle").

We are truly at a turning point for the Country and the world. The EU (European Union) is as divided as our Congress, so they will be no help. At least here, the big issue for BOTH Congressmen and Senators is GETTING RE-ELECTED in the same country. The pandering to lobbyists and ideologues must stop. The hard core Tea Partyists are at least true to their beliefs, but remember the flat world.

The world economic crisis was only in part our fault. We allowed the most selfish politicians and "bankers" to run us into the ground. No regulation, no brakes, no-mind to the constitutional interpretations of the past, and a skilled manipulation of the concepts of a "Free-Market Economy" ruled for 8 years. And, this coincided with Europe deciding to try getting along. No one hired a Cat Herder.

Maybe if we remember Peter Pan's plea that we all believe in Tinker Bell (metaphorically only) our economic system will survive. If it doesn't and we don't begin to rebound quickly, we are facing a future that we have fought 2 world wars, our own revolution, a civil war, and the "baby-boomer wars", for nothing.

*from the CBS Show -"Lost in Space" - fitting!

Author's Copyright by Richard I. Isacoff, Esq., August, 2011

rii@isacofflaw.com
http://www.isacofflaw.com